An Uber driver in Vancouver in January. The ride-hailing company is reporting a wider loss as the coronavirus pandemic forces people to stay at home.
Photo: Darryl Dyck/The Canadian Press/Associated PressUber Technologies Inc.’s net loss ballooned in the first quarter as the ride-hailing giant was stung by the effects of the coronavirus pandemic and signaled further cost reductions a day after announcing plans to cut about 14% of its staff.
Uber reported a net loss Thursday of $2.94 billion on sales of $3.54 billion in the three months ended March 31, compared with a net loss of $1.09 billion and sales of $3.1 billion in the year-ago period. The larger loss includes $2.1 billion in pretax impairment write-downs on some of Uber’s investments that have lost value because of the crisis. Analysts surveyed by FactSet had expected a $1.38 billion net loss on sales of $3.53 billion for the quarter just ended.
San Francisco-based Uber and smaller rival Lyft Inc. have seen the number of riders using their service plummet since shelter-in-place orders were rolled out across much of the U.S. and in cities globally. Both have laid out cost cuts—Lyft has said it would reduce annual expenses around $300 million through measures such as trimming about 17% of staff—to prepare for a protracted period of lower ridership.
Uber’s earnings for the quarter ended March 31 provide only a glimpse of the financial hit from the pandemic. Demand in the U.S. started to drop precipitously from the Covid-19 outbreak around mid-March. Uber said the number of trips in the first quarter was up 7% year-over-year, but fell 13% from the prior three-month period. One bright spot was Eats, Uber’s food-delivery business. That unit has boomed as people stuck at home have relied on such services to get meals from some of their favorite restaurants.
Eats gross bookings surged 52% to $4.68 billion in the first quarter over the year prior and were up 7% compared with the last three months of 2019.
“While our rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats, and prepare us for any recovery scenario,” Chief Executive Dara Khosrowshahi said in a statement.
Lyft, which reported earnings on Wednesday and doesn’t offer food delivery, said ridership fell 75% in April and has barely recovered. “Even as shelter-in-place orders and travel restrictions are modified or lifted, we anticipate that continued social distancing, altered consumer behavior and expected corporate cost cutting will be significant headwinds for Lyft,” Chief Executive Logan Green told analysts.
Uber on Wednesday said it was cutting about 3,700 workers and that Mr. Khosrowshahi agreed to waive his base salary for the rest of the year. “We are continuing to look at all levers to ensure our core rides and Eats businesses emerge from this crisis stronger than ever,” Chief Financial Officer Nelson Chai said in the statement Thursday.
The company suspended its full-year guidance last month, including the goal of being profitable on an adjusted basis before interest, taxes, depreciation and amortization by the end of this year. Uber posted a $612 million first-quarter loss on that basis, which excludes costs linked to its Covid-19 response.
Uber said its response to the viral outbreak, which included measures such as offering health-care workers free rides and providing protective gear to drivers, took $19 million from its top line and added $5 million in costs.
Despite the difficult period, Uber is continuing to invest in ride-sharing activities. The company led a $170 million funding round in electric-scooter rental startup Lime, which had its own round of job cuts last month. Lime, in a statement Thursday, said that as part of the transaction it was buying Uber’s electric-scooter unit Jump.
Uber contributed $85 million to the round as part of a deal that includes an ability to acquire 100% of Lime in two years, according to a person familiar with the terms. The Lime service will be integrated into the Uber app. It also allows Uber to cut its own bike and service operations, which make up much of the company’s other bets segment. In the first quarter, that segment reported a $63 million adjusted operating loss, compared with a $42 million loss a year earlier.
Lyft’s CEO said Wednesday that in the wake of the pandemic, consumers may prefer scooters, bikes and ride services over public transport.
Beyond the current economic slowdown, Uber and Lyft also face pressure from regulators and lawmakers for classifying their drivers as contract workers rather than employees. On Tuesday, California sued the companies, citing the state’s gig-economy law that took effect Jan. 1, saying their treatment of drivers deprives them of rights such as paid sick leave and unemployment insurance—issues made more visible during the pandemic.
—Tim Higgins contributed to this article.
Write to Robert Wall at robert.wall@wsj.com
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